Richard Prebble: “Twenty Economists” Letter Not Worth the Paper It’s Written On

“Group of 20 economists urge PM and Minister of Finance to urgently change course,” screamed the headlines.

When I was a finance minister, I remember similar letters — economists demanding a return to central planning and subsidies. Treasury used to roll its eyes. They knew that anyone can call themselves an economist. One prominent media “economist”, not among the latest signatories, never even earned an undergraduate degree in economics.

Dr Bryce Wilkinson: Alarming US public debt means New Zealand Government should be more prudent

Imagine that your family spent twice as much as it earned last month. Around the kitchen table the mood would be grim and the bank’s patience likely wearing thin.

In August 2025, the United States federal government spend over twice its income, $689 billion versus receipts of $344 billion. Even doubling every American’s tax bill would not have closed that gap.

Brian Easton: Does A Fiscal Debt Target Make Sense?

Do we treat the government finances with the common sense that household’s manage theirs?

It is a commonly held view that we should treat the government as if it is a prudent household. We don’t when it comes to its debt. Currently the government says it wants to constrain its net debt to between 20 and 40 percent of annual GDP; that is, between about 67 and 133 percent of its annual revenue. But households borrow up to 450 percent of their annual before-tax income.

Brian Easton: A Fiscal Fantasyland?

The May 4 issue of the London “Economist” headlined that ‘Governments are living in a fiscal fantasyland’. It focussed on the four biggest economies – the US, China, EU and Japan – although many smaller ones would also illustrate its proposition, that each was losing control of its fiscal position with rising government debt.

Each is a bit different, even if the rise is happening to all of them. Suppose the US Congress would resolve the current dispute over the debt ceiling. Even so ‘America’s budget deficit is set to balloon as its population ages, the cost of handouts swells and the government’s interest bill rises.’ The Economist forecasts that ‘deficits could reach around 7% of GDP a year by the end of this decade—shortfalls America has not seen outside of wars and economic slumps.’ Public debt will rise.